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Commonwealth legislation
This Act has been repealed and is no longer in force. It is retained for historical reference.
This rule tells auditors how to assess whether a company can keep operating for the foreseeable future—generally at least 12 months—and requires them to look for signs of financial or operational distress and evaluate management’s plans to address them.
It applies to statutory auditors under the Corporations Act 2001 (and other financial report auditors) and matters because proper evaluation and disclosure protect investors, creditors and employees from being misled about a company’s survival prospects.
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Direct links to the current provisions in ASA 570 - Going Concern - October 2009.
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 7, 600 Bourke StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400Fax: (03) 8080 7450E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
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© 2013 Auditing and Assurance Standards Board. The text, graphics and layout of this compiled Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Executive Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise, no part of this compiled Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard............................................1-Aus 1.1
Going Concern Assumption....................................................2-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions Are Identified.............16-Aus 16.1
Audit Conclusions and Reporting................................................17
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...........18-20
Use of Going Concern Assumption Inappropriate.....................................21
Management Unwilling to Make or Extend Its Assessment..............................22
Communication with Those Charged with Governance..........................23-Aus 23.1
Significant Delay in the Approval of the Financial Report...............................24
Application and Other Explanatory Material
Going Concern Assumption....................................................A1
Risk Assessment Procedures and Related Activities................................A2-A6
Evaluating Management’s Assessment........................................A7-A12
Period beyond Management’s Assessment................................A13-Aus A14.1
Additional Audit Procedures When Events or Conditions Are Identified...............A15-A18
Audit Conclusions and Reporting.......................................A19-Aus A19.1
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...A20-Aus A24.2
Use of Going Concern Assumption Inappropriate................................A25-A26
Management Unwilling to Make or Extend Its Assessment....................A27-Aus A27.1
Other Considerations...................................................Aus A27.2
Conformity with International Standards on Auditing
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
[Aus] Appendix 2: Illustration of an Auditor’s Report on a General Purpose Financial Report—Modified Opinions due to Going Concern Considerations (Fair Presentation Frameworks)
[Aus] Appendix 3: Illustration of an Auditor’s Report on a General Purpose Financial Report—Emphasis of Matter Paragraph due to Material Uncertainties regarding Going Concern
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 7, 600 Bourke StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400Fax: (03) 8080 7450E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
|---|
© 2013 Auditing and Assurance Standards Board. The text, graphics and layout of this compiled Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Executive Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise, no part of this compiled Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard............................................1-Aus 1.1
Going Concern Assumption....................................................2-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions Are Identified.............16-Aus 16.1
Audit Conclusions and Reporting................................................17
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...........18-20
Use of Going Concern Assumption Inappropriate.....................................21
Management Unwilling to Make or Extend Its Assessment..............................22
Communication with Those Charged with Governance..........................23-Aus 23.1
Significant Delay in the Approval of the Financial Report...............................24
Application and Other Explanatory Material
Going Concern Assumption....................................................A1
Risk Assessment Procedures and Related Activities................................A2-A6
Evaluating Management’s Assessment........................................A7-A12
Period beyond Management’s Assessment................................A13-Aus A14.1
Additional Audit Procedures When Events or Conditions Are Identified...............A15-A18
Audit Conclusions and Reporting.......................................A19-Aus A19.1
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...A20-Aus A24.2
Use of Going Concern Assumption Inappropriate................................A25-A26
Management Unwilling to Make or Extend Its Assessment....................A27-Aus A27.1
Other Considerations...................................................Aus A27.2
Conformity with International Standards on Auditing
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
[Aus] Appendix 2: Illustration of an Auditor’s Report on a General Purpose Financial Report—Modified Opinions due to Going Concern Considerations (Fair Presentation Frameworks)
[Aus] Appendix 3: Illustration of an Auditor’s Report on a General Purpose Financial Report—Emphasis of Matter Paragraph due to Material Uncertainties regarding Going Concern
This compilation takes into account amendments made up to and including 1 July 2013 and was prepared on 1 July 2013 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (October 2009) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 27 October 2009 | 1 January 2010 |
| ASA 2011‑1 [B] | 27 June 2011 | 1 July 2011 |
| ASA 2012-1 [C] | 31 July 2012 | 1 July 2012 |
| ASA 2013‑3 [D] | 1 July 2013 | 1 July 2013 |
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| A8 | Amended | ASA 2011‑1 [42] |
| A12 | Amended | ASA 2011‑1 [43] |
| [Aus] Appendix 2 | Amended | ASA 2011‑1 [44] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [45] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [46] |
| [Aus] Appendix 3 | Amended | ASA 2011‑1 [47] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [48] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [49] |
| [Aus] Appendix 1 | Diagram replaced | ASA 2012-1 [4] |
| A2 | Amended | ASA 2013‑3 [10] |
| A21 | Amended | ASA 2013‑3 [11] |
| Aus A21.1 | Amended | ASA 2013‑3 [12] |
| [Aus] Appendix 3 | Amended | ASA 2013‑3 [13] |
[A] Federal Register of Legislative Instruments – registration number F2009L04095,
27 October 2009
[B] Federal Register of Legislative Instruments – registration number F2011L01379,
27 June 2011.
[C] Federal Register of Legislative Instruments – registration number F2012L01671,
10 August 2012.
[D] Federal Register of Legislative Instruments – registration number F2013L01326,
1 July 2013.
Auditing Standard ASA 570 Going Concern (as amended to 1 July 2013) is set out in paragraphs Aus 0.1 to Aus A27.2 and [Aus] Appendices 1 to 3.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing Standards, which sets out the intentions of the AUASB on how the Australian Auditing Standards, operative for financial reporting periods commencing on or after 1 January 2010, are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
Dated: 1 July 2013
This compilation takes into account amendments made up to and including 1 July 2013 and was prepared on 1 July 2013 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (October 2009) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 27 October 2009 | 1 January 2010 |
| ASA 2011‑1 [B] | 27 June 2011 | 1 July 2011 |
| ASA 2012-1 [C] | 31 July 2012 | 1 July 2012 |
| ASA 2013‑3 [D] | 1 July 2013 | 1 July 2013 |
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| A8 | Amended | ASA 2011‑1 [42] |
| A12 | Amended | ASA 2011‑1 [43] |
| [Aus] Appendix 2 | Amended | ASA 2011‑1 [44] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [45] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [46] |
| [Aus] Appendix 3 | Amended | ASA 2011‑1 [47] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [48] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [49] |
| [Aus] Appendix 1 | Diagram replaced | ASA 2012-1 [4] |
| A2 | Amended | ASA 2013‑3 [10] |
| A21 | Amended | ASA 2013‑3 [11] |
| Aus A21.1 | Amended | ASA 2013‑3 [12] |
| [Aus] Appendix 3 | Amended | ASA 2013‑3 [13] |
[A] Federal Register of Legislative Instruments – registration number F2009L04095,
27 October 2009
[B] Federal Register of Legislative Instruments – registration number F2011L01379,
27 June 2011.
[C] Federal Register of Legislative Instruments – registration number F2012L01671,
10 August 2012.
[D] Federal Register of Legislative Instruments – registration number F2013L01326,
1 July 2013.
Auditing Standard ASA 570 Going Concern (as amended to 1 July 2013) is set out in paragraphs Aus 0.1 to Aus A27.2 and [Aus] Appendices 1 to 3.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing Standards, which sets out the intentions of the AUASB on how the Australian Auditing Standards, operative for financial reporting periods commencing on or after 1 January 2010, are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
Dated: 1 July 2013
Auditing Standard ASA 570 Going Concern (as amended to 1 July 2013) is set out in paragraphs Aus 0.1 to Aus A27.2 and [Aus] Appendices 1 to 3.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing Standards, which sets out the intentions of the AUASB on how the Australian Auditing Standards, operative for financial reporting periods commencing on or after 1 January 2010, are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
Auditing Standard ASA 570
The Auditing and Assurance Standards Board (AUASB) made Auditing Standard ASA 570 Going Concern, pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, on 27 October 2009.
This compiled version of ASA 570 incorporates subsequent amendments contained in other Auditing Standards made by the AUASB up to and including 1 July 2013 (see Compilation Details).
Aus 0.1 This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit of a financial report for a half‑year, in accordance with the Corporations Act 2001; and
(b) an audit of a financial report, or a complete set of financial statements, for any other purpose.
Aus 0.2 This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Aus 0.3 This Auditing Standard is operative for financial reporting periods commencing on or after 1 January 2010. [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilation Details.]
Aus 1.1 For the purposes of this Auditing Standard, a reference to management is taken to mean “management, and where appropriate, those charged with governance”.
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern
Aus 3.1 Australian Accounting Standards[*] require management to make an assessment of an entity’s ability to continue as a going concern. In addition, certain legislation, such as the Corporations Act 2001,[#] requires a formal statement as to the solvency of the entity to be made by those charged with governance and included as part of the financial report upon which the auditor’s opinion is expressed.
The degree of uncertainty associated with the outcome of an event or condition increases significantly the further into the future an event or condition or the outcome occurs. For that reason, most financial reporting frameworks that require an explicit management assessment specify the period for which management is required to take into account all available information.
The size and complexity of the entity, the nature and condition of its business and the degree to which it is affected by external factors affect the judgement regarding the outcome of events or conditions.
Any judgement about the future is based on information available at the time at which the judgement is made. Subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made.
Responsibilities of the Auditor
Aus 13.1 In evaluating management’s assessment of the entity’s ability to continue as a going concern, the auditor shall consider the relevant period, which may be the same or may differ from that used by management to make its assessment as required by the applicable financial reporting framework. If management’s assessment of the entity’s ability to continue as a going concern covers less than the relevant period, the auditor shall request management to correspond to the relevant period used by the auditor.(Ref: Para. A10‑A12)
Aus 13.2 Relevant period means the period of approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for:
(a) the next annual reporting period in the case of an annual financial report; or
(b) the corresponding reporting period for the following year in the case of an interim reporting period.
Aus 16.1 If such events or conditions are identified, the auditor shall consider whether they affect the auditor’s assessment of the risks of material misstatement in accordance with ASA 315.[*]
Aus 23.1 Whether management is unwilling to make or extend its assessment as described in paragraph 22 of this Auditing Standard.
* * *
Considerations Specific to Public Sector Entities
Events or Conditions That May Cast Doubt about Going Concern Assumption (Ref: Para. 10)
Financial
Net liability or net current liability position.
Fixed‑term borrowings approaching maturity without realistic prospects of renewal or repayment; or excessive reliance on short‑term borrowings to finance long‑term assets.
Indications of withdrawal of financial support by creditors.
Negative operating cash flows indicated by historical or prospective financial report.
Adverse key financial ratios.
Substantial operating losses or significant deterioration in the value of assets used to generate cash flows.
Arrears or discontinuance of dividends.
Inability to pay creditors on due dates.
Inability to comply with the terms of loan agreements.
Change from credit to cash‑on‑delivery transactions with suppliers.
Inability to obtain financing for essential new product development or other essential investments.
Operating
Management intentions to liquidate the entity or to cease operations.
Loss of key management without replacement.
Loss of a major market, key customer(s), franchise, licence, or principal supplier(s).
Labour difficulties.
Shortages of important supplies.
Emergence of a highly successful competitor.
Other
Non‑compliance with capital or other statutory requirements.
Pending legal or regulatory proceedings against the entity that may, if successful, result in claims that the entity is unlikely to be able to satisfy.
Changes in law or regulation or government policy expected to adversely affect the entity.
Uninsured or underinsured catastrophes when they occur.
The significance of such events or conditions often can be mitigated by other factors. For example, the effect of an entity being unable to make its normal debt repayments may be counter‑balanced by management’s plans to maintain adequate cash flows by alternative means, such as by disposing of assets, rescheduling loan repayments, or obtaining additional capital. Similarly, the loss of a principal supplier may be mitigated by the availability of a suitable alternative source of supply.
Considerations Specific to Smaller Entities
Remaining Alert throughout the Audit for Audit Evidence about Events or Conditions (Ref: Para. 11)
Management’s Assessment and Supporting Analysis and the Auditor’s Evaluation (Ref: Para. 12)
The Period of Management’s Assessment (Ref: Para. Aus 13.1‑Aus 13.2)
Considerations Specific to Smaller Entities (Ref: Para. 12‑13)
Aus A14.1 Other than enquiry of management, the auditor does not have a responsibility to perform any other audit procedures to identify events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern beyond the relevant period, which, as discussed in paragraph Aus 13.2, is approximately twelve months from the date of the auditor’s report on the current financial report.
Analysing and discussing cash flow, profit and other relevant forecasts with management.
Analysing and discussing the entity’s latest available interim financial report.
Reading the terms of debentures and loan agreements and determining whether any have been breached.
Reading minutes of the meetings of shareholders, those charged with governance and relevant committees for reference to financing difficulties.
Enquiring of the entity’s legal counsel regarding the existence of litigation and claims and the reasonableness of management’s assessments of their outcome and the estimate of their financial implications.
Confirming the existence, legality and enforceability of arrangements to provide or maintain financial support with related and third parties and assessing the financial ability of such parties to provide additional funds.
Evaluating the entity’s plans to deal with unfilled customer orders.
Performing audit procedures regarding subsequent events to identify those that either mitigate or otherwise affect the entity’s ability to continue as a going concern.
Confirming the existence, terms and adequacy of borrowing facilities.
Obtaining and reviewing reports of regulatory actions.
Determining the adequacy of support for any planned disposals of assets.
Evaluating Management’s Plans for Future Actions (Ref: Para. 16(b))
The Period of Management’s Assessment (Ref: Para. 16(c))
The prospective financial information for recent prior periods with historical results; and
The prospective financial information for the current period with results achieved to date.
Aus A19.1 Refer to [Aus] Appendix 1 for a diagrammatic illustration of the links between going concern considerations and the types of audit opinions.
Adequacy of Disclosure of Material Uncertainty (Ref: Para. 18)
Audit Reporting When Disclosure of Material Uncertainty Is Adequate (Ref: Para. 19)
Emphasis of Matter
Without modifying our opinion, we draw attention to Note X in the financial report which indicates that the entity incurred a net loss of ZZZ during the year ended 30 June 20X1 and, as of that date, the entity’s current liabilities exceeded its total assets by YYY. These conditions, along with other matters as set forth in Note X, indicate the existence of a material uncertainty that may cast significant doubt about the entity’s ability to continue as a going concern and therefore the entity may be unable to realise its assets and discharge its liabilities in the normal course of business.
Aus A21.1 Refer to [Aus] Appendix 3 for an Illustrative Auditor’s Report that contains an unmodified opinion with an Emphasis of Matter paragraph.
Audit Reporting When Disclosure of Material Uncertainty Is Inadequate (Ref: Para. 20)
Basis for Qualified Opinion
The company’s financing arrangements expire and amounts outstanding are payable on 19 September 20X1. The company has been unable to re‑negotiate or obtain replacement financing. This situation indicates the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not fully disclose this fact.
Qualified Opinion
[Deleted by the AUASB. Refer Aus A23.1]
Qualified Opinion
Aus A23.1 In our opinion, except for the incomplete disclosure of the information referred to in the Basis for Qualified Opinion paragraph, the financial report of ABC Company Ltd. is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s financial position as at 30 June 20X1 and of its performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Aus A23.2 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains a qualified opinion.
Basis for Adverse Opinion
The company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The company has been unable to re‑negotiate or obtain replacement financing and is considering filing for bankruptcy. These events indicate a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not disclose this fact.
Adverse Opinion
[Deleted by the AUASB. Refer Aus A24.1]
Adverse Opinion
Aus A24.1 In our opinion, because of the omission of the information described in the Basis for Adverse Opinion paragraph, the financial report of ABC Company Ltd. is not in accordance with the Corporations Act 2001, and does not:
(a) give a true and fair view of the financial position of the company as at 30 June 20X1, and of its performance for the year then ended; and
(b) comply with Australian Accounting Standards and the Corporations Regulations 2001.
Aus A24.2 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains an adverse opinion.
Aus A27.1 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains a disclaimer of opinion.
Aus A27.2 An auditor is required under the Corporations Act 2001[*] (the Act) to notify the Australian Securities and Investments Commission (ASIC) if the auditor, when conducting an audit, becomes aware of certain circumstances specified in the Act. ASIC[#] provides guidance to help auditors comply with their obligations under the Corporations Act 2001, such as reporting suspected insolvent trading.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
If such events or conditions are identified, the auditor shall consider whether they affect the auditor’s assessment of the risks of material misstatement in accordance with ASA 315. (Ref: Para. Aus 16.1)
Whether management is unwilling to make or extend its assessment as described in paragraph 22 of this Auditing Standard. (Ref: Para. Aus 23.1)
This Auditing Standard requires the auditor to assess the appropriateness of the going concern assumption for the relevant period, which is approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period. However, ISA 570 requires the auditor to consider the appropriateness of the going concern assumption for a period of at least, but not limited to, twelve months from the balance sheet date. (Ref: Para. Aus 13.1‑13.2)
The following application and other explanatory material is additional to ISA 570:
Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains illustrations of auditors’ reports modified due to going concern considerations.
Appendix 3 contains an illustration of an auditor’s report with an Emphasis of Matter paragraph due to material uncertainties on the going concern basis.
Compliance with this Auditing Standard enables compliance with ISA 570.
Auditing Standard ASA 570
The Auditing and Assurance Standards Board (AUASB) made Auditing Standard ASA 570 Going Concern, pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, on 27 October 2009.
This compiled version of ASA 570 incorporates subsequent amendments contained in other Auditing Standards made by the AUASB up to and including 1 July 2013 (see Compilation Details).
Aus 0.1 This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit of a financial report for a half‑year, in accordance with the Corporations Act 2001; and
(b) an audit of a financial report, or a complete set of financial statements, for any other purpose.
Aus 0.2 This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Aus 0.3 This Auditing Standard is operative for financial reporting periods commencing on or after 1 January 2010. [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilation Details.]
Aus 1.1 For the purposes of this Auditing Standard, a reference to management is taken to mean “management, and where appropriate, those charged with governance”.
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern
Aus 3.1 Australian Accounting Standards[*] require management to make an assessment of an entity’s ability to continue as a going concern. In addition, certain legislation, such as the Corporations Act 2001,[#] requires a formal statement as to the solvency of the entity to be made by those charged with governance and included as part of the financial report upon which the auditor’s opinion is expressed.
The degree of uncertainty associated with the outcome of an event or condition increases significantly the further into the future an event or condition or the outcome occurs. For that reason, most financial reporting frameworks that require an explicit management assessment specify the period for which management is required to take into account all available information.
The size and complexity of the entity, the nature and condition of its business and the degree to which it is affected by external factors affect the judgement regarding the outcome of events or conditions.
Any judgement about the future is based on information available at the time at which the judgement is made. Subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made.
Responsibilities of the Auditor
Aus 13.1 In evaluating management’s assessment of the entity’s ability to continue as a going concern, the auditor shall consider the relevant period, which may be the same or may differ from that used by management to make its assessment as required by the applicable financial reporting framework. If management’s assessment of the entity’s ability to continue as a going concern covers less than the relevant period, the auditor shall request management to correspond to the relevant period used by the auditor.(Ref: Para. A10‑A12)
Aus 13.2 Relevant period means the period of approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for:
(a) the next annual reporting period in the case of an annual financial report; or
(b) the corresponding reporting period for the following year in the case of an interim reporting period.
Aus 16.1 If such events or conditions are identified, the auditor shall consider whether they affect the auditor’s assessment of the risks of material misstatement in accordance with ASA 315.[*]
Aus 23.1 Whether management is unwilling to make or extend its assessment as described in paragraph 22 of this Auditing Standard.
* * *
Considerations Specific to Public Sector Entities
Events or Conditions That May Cast Doubt about Going Concern Assumption (Ref: Para. 10)
Financial
Net liability or net current liability position.
Fixed‑term borrowings approaching maturity without realistic prospects of renewal or repayment; or excessive reliance on short‑term borrowings to finance long‑term assets.
Indications of withdrawal of financial support by creditors.
Negative operating cash flows indicated by historical or prospective financial report.
Adverse key financial ratios.
Substantial operating losses or significant deterioration in the value of assets used to generate cash flows.
Arrears or discontinuance of dividends.
Inability to pay creditors on due dates.
Inability to comply with the terms of loan agreements.
Change from credit to cash‑on‑delivery transactions with suppliers.
Inability to obtain financing for essential new product development or other essential investments.
Operating
Management intentions to liquidate the entity or to cease operations.
Loss of key management without replacement.
Loss of a major market, key customer(s), franchise, licence, or principal supplier(s).
Labour difficulties.
Shortages of important supplies.
Emergence of a highly successful competitor.
Other
Non‑compliance with capital or other statutory requirements.
Pending legal or regulatory proceedings against the entity that may, if successful, result in claims that the entity is unlikely to be able to satisfy.
Changes in law or regulation or government policy expected to adversely affect the entity.
Uninsured or underinsured catastrophes when they occur.
The significance of such events or conditions often can be mitigated by other factors. For example, the effect of an entity being unable to make its normal debt repayments may be counter‑balanced by management’s plans to maintain adequate cash flows by alternative means, such as by disposing of assets, rescheduling loan repayments, or obtaining additional capital. Similarly, the loss of a principal supplier may be mitigated by the availability of a suitable alternative source of supply.
Considerations Specific to Smaller Entities
Remaining Alert throughout the Audit for Audit Evidence about Events or Conditions (Ref: Para. 11)
Management’s Assessment and Supporting Analysis and the Auditor’s Evaluation (Ref: Para. 12)
The Period of Management’s Assessment (Ref: Para. Aus 13.1‑Aus 13.2)
Considerations Specific to Smaller Entities (Ref: Para. 12‑13)
Aus A14.1 Other than enquiry of management, the auditor does not have a responsibility to perform any other audit procedures to identify events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern beyond the relevant period, which, as discussed in paragraph Aus 13.2, is approximately twelve months from the date of the auditor’s report on the current financial report.
Analysing and discussing cash flow, profit and other relevant forecasts with management.
Analysing and discussing the entity’s latest available interim financial report.
Reading the terms of debentures and loan agreements and determining whether any have been breached.
Reading minutes of the meetings of shareholders, those charged with governance and relevant committees for reference to financing difficulties.
Enquiring of the entity’s legal counsel regarding the existence of litigation and claims and the reasonableness of management’s assessments of their outcome and the estimate of their financial implications.
Confirming the existence, legality and enforceability of arrangements to provide or maintain financial support with related and third parties and assessing the financial ability of such parties to provide additional funds.
Evaluating the entity’s plans to deal with unfilled customer orders.
Performing audit procedures regarding subsequent events to identify those that either mitigate or otherwise affect the entity’s ability to continue as a going concern.
Confirming the existence, terms and adequacy of borrowing facilities.
Obtaining and reviewing reports of regulatory actions.
Determining the adequacy of support for any planned disposals of assets.
Evaluating Management’s Plans for Future Actions (Ref: Para. 16(b))
The Period of Management’s Assessment (Ref: Para. 16(c))
The prospective financial information for recent prior periods with historical results; and
The prospective financial information for the current period with results achieved to date.
Aus A19.1 Refer to [Aus] Appendix 1 for a diagrammatic illustration of the links between going concern considerations and the types of audit opinions.
Adequacy of Disclosure of Material Uncertainty (Ref: Para. 18)
Audit Reporting When Disclosure of Material Uncertainty Is Adequate (Ref: Para. 19)
Emphasis of Matter
Without modifying our opinion, we draw attention to Note X in the financial report which indicates that the entity incurred a net loss of ZZZ during the year ended 30 June 20X1 and, as of that date, the entity’s current liabilities exceeded its total assets by YYY. These conditions, along with other matters as set forth in Note X, indicate the existence of a material uncertainty that may cast significant doubt about the entity’s ability to continue as a going concern and therefore the entity may be unable to realise its assets and discharge its liabilities in the normal course of business.
Aus A21.1 Refer to [Aus] Appendix 3 for an Illustrative Auditor’s Report that contains an unmodified opinion with an Emphasis of Matter paragraph.
Audit Reporting When Disclosure of Material Uncertainty Is Inadequate (Ref: Para. 20)
Basis for Qualified Opinion
The company’s financing arrangements expire and amounts outstanding are payable on 19 September 20X1. The company has been unable to re‑negotiate or obtain replacement financing. This situation indicates the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not fully disclose this fact.
Qualified Opinion
[Deleted by the AUASB. Refer Aus A23.1]
Qualified Opinion
Aus A23.1 In our opinion, except for the incomplete disclosure of the information referred to in the Basis for Qualified Opinion paragraph, the financial report of ABC Company Ltd. is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s financial position as at 30 June 20X1 and of its performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Aus A23.2 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains a qualified opinion.
Basis for Adverse Opinion
The company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The company has been unable to re‑negotiate or obtain replacement financing and is considering filing for bankruptcy. These events indicate a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not disclose this fact.
Adverse Opinion
[Deleted by the AUASB. Refer Aus A24.1]
Adverse Opinion
Aus A24.1 In our opinion, because of the omission of the information described in the Basis for Adverse Opinion paragraph, the financial report of ABC Company Ltd. is not in accordance with the Corporations Act 2001, and does not:
(a) give a true and fair view of the financial position of the company as at 30 June 20X1, and of its performance for the year then ended; and
(b) comply with Australian Accounting Standards and the Corporations Regulations 2001.
Aus A24.2 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains an adverse opinion.
Aus A27.1 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains a disclaimer of opinion.
Aus A27.2 An auditor is required under the Corporations Act 2001[*] (the Act) to notify the Australian Securities and Investments Commission (ASIC) if the auditor, when conducting an audit, becomes aware of certain circumstances specified in the Act. ASIC[#] provides guidance to help auditors comply with their obligations under the Corporations Act 2001, such as reporting suspected insolvent trading.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
If such events or conditions are identified, the auditor shall consider whether they affect the auditor’s assessment of the risks of material misstatement in accordance with ASA 315. (Ref: Para. Aus 16.1)
Whether management is unwilling to make or extend its assessment as described in paragraph 22 of this Auditing Standard. (Ref: Para. Aus 23.1)
This Auditing Standard requires the auditor to assess the appropriateness of the going concern assumption for the relevant period, which is approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period. However, ISA 570 requires the auditor to consider the appropriateness of the going concern assumption for a period of at least, but not limited to, twelve months from the balance sheet date. (Ref: Para. Aus 13.1‑13.2)
The following application and other explanatory material is additional to ISA 570:
Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains illustrations of auditors’ reports modified due to going concern considerations.
Appendix 3 contains an illustration of an auditor’s report with an Emphasis of Matter paragraph due to material uncertainties on the going concern basis.
Compliance with this Auditing Standard enables compliance with ISA 570.
Aus 0.1 This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit of a financial report for a half‑year, in accordance with the Corporations Act 2001; and
(b) an audit of a financial report, or a complete set of financial statements, for any other purpose.
Aus 0.2 This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Aus 0.3 This Auditing Standard is operative for financial reporting periods commencing on or after 1 January 2010. [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilation Details.]
Auditing Standard ASA 570
The Auditing and Assurance Standards Board (AUASB) made Auditing Standard ASA 570 Going Concern, pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, on 27 October 2009.
This compiled version of ASA 570 incorporates subsequent amendments contained in other Auditing Standards made by the AUASB up to and including 1 July 2013 (see Compilation Details).
Aus 0.1 This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit of a financial report for a half‑year, in accordance with the Corporations Act 2001; and
(b) an audit of a financial report, or a complete set of financial statements, for any other purpose.
Aus 0.2 This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Aus 0.3 This Auditing Standard is operative for financial reporting periods commencing on or after 1 January 2010. [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilation Details.]
Aus 1.1 For the purposes of this Auditing Standard, a reference to management is taken to mean “management, and where appropriate, those charged with governance”.
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern
Aus 3.1 Australian Accounting Standards[*] require management to make an assessment of an entity’s ability to continue as a going concern. In addition, certain legislation, such as the Corporations Act 2001,[#] requires a formal statement as to the solvency of the entity to be made by those charged with governance and included as part of the financial report upon which the auditor’s opinion is expressed.
The degree of uncertainty associated with the outcome of an event or condition increases significantly the further into the future an event or condition or the outcome occurs. For that reason, most financial reporting frameworks that require an explicit management assessment specify the period for which management is required to take into account all available information.
The size and complexity of the entity, the nature and condition of its business and the degree to which it is affected by external factors affect the judgement regarding the outcome of events or conditions.
Any judgement about the future is based on information available at the time at which the judgement is made. Subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made.
Responsibilities of the Auditor
Aus 13.1 In evaluating management’s assessment of the entity’s ability to continue as a going concern, the auditor shall consider the relevant period, which may be the same or may differ from that used by management to make its assessment as required by the applicable financial reporting framework. If management’s assessment of the entity’s ability to continue as a going concern covers less than the relevant period, the auditor shall request management to correspond to the relevant period used by the auditor.(Ref: Para. A10‑A12)
Aus 13.2 Relevant period means the period of approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for:
(a) the next annual reporting period in the case of an annual financial report; or
(b) the corresponding reporting period for the following year in the case of an interim reporting period.
Aus 16.1 If such events or conditions are identified, the auditor shall consider whether they affect the auditor’s assessment of the risks of material misstatement in accordance with ASA 315.[*]
Aus 23.1 Whether management is unwilling to make or extend its assessment as described in paragraph 22 of this Auditing Standard.
* * *
Considerations Specific to Public Sector Entities
Events or Conditions That May Cast Doubt about Going Concern Assumption (Ref: Para. 10)
Financial
Net liability or net current liability position.
Fixed‑term borrowings approaching maturity without realistic prospects of renewal or repayment; or excessive reliance on short‑term borrowings to finance long‑term assets.
Indications of withdrawal of financial support by creditors.
Negative operating cash flows indicated by historical or prospective financial report.
Adverse key financial ratios.
Substantial operating losses or significant deterioration in the value of assets used to generate cash flows.
Arrears or discontinuance of dividends.
Inability to pay creditors on due dates.
Inability to comply with the terms of loan agreements.
Change from credit to cash‑on‑delivery transactions with suppliers.
Inability to obtain financing for essential new product development or other essential investments.
Operating
Management intentions to liquidate the entity or to cease operations.
Loss of key management without replacement.
Loss of a major market, key customer(s), franchise, licence, or principal supplier(s).
Labour difficulties.
Shortages of important supplies.
Emergence of a highly successful competitor.
Other
Non‑compliance with capital or other statutory requirements.
Pending legal or regulatory proceedings against the entity that may, if successful, result in claims that the entity is unlikely to be able to satisfy.
Changes in law or regulation or government policy expected to adversely affect the entity.
Uninsured or underinsured catastrophes when they occur.
The significance of such events or conditions often can be mitigated by other factors. For example, the effect of an entity being unable to make its normal debt repayments may be counter‑balanced by management’s plans to maintain adequate cash flows by alternative means, such as by disposing of assets, rescheduling loan repayments, or obtaining additional capital. Similarly, the loss of a principal supplier may be mitigated by the availability of a suitable alternative source of supply.
Considerations Specific to Smaller Entities
Remaining Alert throughout the Audit for Audit Evidence about Events or Conditions (Ref: Para. 11)
Management’s Assessment and Supporting Analysis and the Auditor’s Evaluation (Ref: Para. 12)
The Period of Management’s Assessment (Ref: Para. Aus 13.1‑Aus 13.2)
Considerations Specific to Smaller Entities (Ref: Para. 12‑13)
Aus A14.1 Other than enquiry of management, the auditor does not have a responsibility to perform any other audit procedures to identify events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern beyond the relevant period, which, as discussed in paragraph Aus 13.2, is approximately twelve months from the date of the auditor’s report on the current financial report.
Analysing and discussing cash flow, profit and other relevant forecasts with management.
Analysing and discussing the entity’s latest available interim financial report.
Reading the terms of debentures and loan agreements and determining whether any have been breached.
Reading minutes of the meetings of shareholders, those charged with governance and relevant committees for reference to financing difficulties.
Enquiring of the entity’s legal counsel regarding the existence of litigation and claims and the reasonableness of management’s assessments of their outcome and the estimate of their financial implications.
Confirming the existence, legality and enforceability of arrangements to provide or maintain financial support with related and third parties and assessing the financial ability of such parties to provide additional funds.
Evaluating the entity’s plans to deal with unfilled customer orders.
Performing audit procedures regarding subsequent events to identify those that either mitigate or otherwise affect the entity’s ability to continue as a going concern.
Confirming the existence, terms and adequacy of borrowing facilities.
Obtaining and reviewing reports of regulatory actions.
Determining the adequacy of support for any planned disposals of assets.
Evaluating Management’s Plans for Future Actions (Ref: Para. 16(b))
The Period of Management’s Assessment (Ref: Para. 16(c))
The prospective financial information for recent prior periods with historical results; and
The prospective financial information for the current period with results achieved to date.
Aus A19.1 Refer to [Aus] Appendix 1 for a diagrammatic illustration of the links between going concern considerations and the types of audit opinions.
Adequacy of Disclosure of Material Uncertainty (Ref: Para. 18)
Audit Reporting When Disclosure of Material Uncertainty Is Adequate (Ref: Para. 19)
Emphasis of Matter
Without modifying our opinion, we draw attention to Note X in the financial report which indicates that the entity incurred a net loss of ZZZ during the year ended 30 June 20X1 and, as of that date, the entity’s current liabilities exceeded its total assets by YYY. These conditions, along with other matters as set forth in Note X, indicate the existence of a material uncertainty that may cast significant doubt about the entity’s ability to continue as a going concern and therefore the entity may be unable to realise its assets and discharge its liabilities in the normal course of business.
Aus A21.1 Refer to [Aus] Appendix 3 for an Illustrative Auditor’s Report that contains an unmodified opinion with an Emphasis of Matter paragraph.
Audit Reporting When Disclosure of Material Uncertainty Is Inadequate (Ref: Para. 20)
Basis for Qualified Opinion
The company’s financing arrangements expire and amounts outstanding are payable on 19 September 20X1. The company has been unable to re‑negotiate or obtain replacement financing. This situation indicates the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not fully disclose this fact.
Qualified Opinion
[Deleted by the AUASB. Refer Aus A23.1]
Qualified Opinion
Aus A23.1 In our opinion, except for the incomplete disclosure of the information referred to in the Basis for Qualified Opinion paragraph, the financial report of ABC Company Ltd. is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s financial position as at 30 June 20X1 and of its performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Aus A23.2 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains a qualified opinion.
Basis for Adverse Opinion
The company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The company has been unable to re‑negotiate or obtain replacement financing and is considering filing for bankruptcy. These events indicate a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not disclose this fact.
Adverse Opinion
[Deleted by the AUASB. Refer Aus A24.1]
Adverse Opinion
Aus A24.1 In our opinion, because of the omission of the information described in the Basis for Adverse Opinion paragraph, the financial report of ABC Company Ltd. is not in accordance with the Corporations Act 2001, and does not:
(a) give a true and fair view of the financial position of the company as at 30 June 20X1, and of its performance for the year then ended; and
(b) comply with Australian Accounting Standards and the Corporations Regulations 2001.
Aus A24.2 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains an adverse opinion.
Aus A27.1 Refer to [Aus] Appendix 2 for an Illustrative Auditor’s Report that contains a disclaimer of opinion.
Aus A27.2 An auditor is required under the Corporations Act 2001[*] (the Act) to notify the Australian Securities and Investments Commission (ASIC) if the auditor, when conducting an audit, becomes aware of certain circumstances specified in the Act. ASIC[#] provides guidance to help auditors comply with their obligations under the Corporations Act 2001, such as reporting suspected insolvent trading.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
If such events or conditions are identified, the auditor shall consider whether they affect the auditor’s assessment of the risks of material misstatement in accordance with ASA 315. (Ref: Para. Aus 16.1)
Whether management is unwilling to make or extend its assessment as described in paragraph 22 of this Auditing Standard. (Ref: Para. Aus 23.1)
This Auditing Standard requires the auditor to assess the appropriateness of the going concern assumption for the relevant period, which is approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period. However, ISA 570 requires the auditor to consider the appropriateness of the going concern assumption for a period of at least, but not limited to, twelve months from the balance sheet date. (Ref: Para. Aus 13.1‑13.2)
The following application and other explanatory material is additional to ISA 570:
Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains illustrations of auditors’ reports modified due to going concern considerations.
Appendix 3 contains an illustration of an auditor’s report with an Emphasis of Matter paragraph due to material uncertainties on the going concern basis.
Compliance with this Auditing Standard enables compliance with ISA 570.
Aus 1.1 For the purposes of this Auditing Standard, a reference to management is taken to mean “management, and where appropriate, those charged with governance”.
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern
Aus 3.1 Australian Accounting Standards[*] require management to make an assessment of an entity’s ability to continue as a going concern. In addition, certain legislation, such as the Corporations Act 2001,[#] requires a formal statement as to the solvency of the entity to be made by those charged with governance and included as part of the financial report upon which the auditor’s opinion is expressed.
The degree of uncertainty associated with the outcome of an event or condition increases significantly the further into the future an event or condition or the outcome occurs. For that reason, most financial reporting frameworks that require an explicit management assessment specify the period for which management is required to take into account all available information.
The size and complexity of the entity, the nature and condition of its business and the degree to which it is affected by external factors affect the judgement regarding the outcome of events or conditions.
Any judgement about the future is based on information available at the time at which the judgement is made. Subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made.
Responsibilities of the Auditor
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 7, 600 Bourke StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400Fax: (03) 8080 7450E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
|---|
© 2013 Auditing and Assurance Standards Board. The text, graphics and layout of this compiled Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Executive Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise, no part of this compiled Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard............................................1-Aus 1.1
Going Concern Assumption....................................................2-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions Are Identified.............16-Aus 16.1
Audit Conclusions and Reporting................................................17
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...........18-20
Use of Going Concern Assumption Inappropriate.....................................21
Management Unwilling to Make or Extend Its Assessment..............................22
Communication with Those Charged with Governance..........................23-Aus 23.1
Significant Delay in the Approval of the Financial Report...............................24
Application and Other Explanatory Material
Going Concern Assumption....................................................A1
Risk Assessment Procedures and Related Activities................................A2-A6
Evaluating Management’s Assessment........................................A7-A12
Period beyond Management’s Assessment................................A13-Aus A14.1
Additional Audit Procedures When Events or Conditions Are Identified...............A15-A18
Audit Conclusions and Reporting.......................................A19-Aus A19.1
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...A20-Aus A24.2
Use of Going Concern Assumption Inappropriate................................A25-A26
Management Unwilling to Make or Extend Its Assessment....................A27-Aus A27.1
Other Considerations...................................................Aus A27.2
Conformity with International Standards on Auditing
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
[Aus] Appendix 2: Illustration of an Auditor’s Report on a General Purpose Financial Report—Modified Opinions due to Going Concern Considerations (Fair Presentation Frameworks)
[Aus] Appendix 3: Illustration of an Auditor’s Report on a General Purpose Financial Report—Emphasis of Matter Paragraph due to Material Uncertainties regarding Going Concern
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 7, 600 Bourke StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400Fax: (03) 8080 7450E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
|---|
© 2013 Auditing and Assurance Standards Board. The text, graphics and layout of this compiled Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Executive Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise, no part of this compiled Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard............................................1-Aus 1.1
Going Concern Assumption....................................................2-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions Are Identified.............16-Aus 16.1
Audit Conclusions and Reporting................................................17
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...........18-20
Use of Going Concern Assumption Inappropriate.....................................21
Management Unwilling to Make or Extend Its Assessment..............................22
Communication with Those Charged with Governance..........................23-Aus 23.1
Significant Delay in the Approval of the Financial Report...............................24
Application and Other Explanatory Material
Going Concern Assumption....................................................A1
Risk Assessment Procedures and Related Activities................................A2-A6
Evaluating Management’s Assessment........................................A7-A12
Period beyond Management’s Assessment................................A13-Aus A14.1
Additional Audit Procedures When Events or Conditions Are Identified...............A15-A18
Audit Conclusions and Reporting.......................................A19-Aus A19.1
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists...A20-Aus A24.2
Use of Going Concern Assumption Inappropriate................................A25-A26
Management Unwilling to Make or Extend Its Assessment....................A27-Aus A27.1
Other Considerations...................................................Aus A27.2
Conformity with International Standards on Auditing
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
[Aus] Appendix 2: Illustration of an Auditor’s Report on a General Purpose Financial Report—Modified Opinions due to Going Concern Considerations (Fair Presentation Frameworks)
[Aus] Appendix 3: Illustration of an Auditor’s Report on a General Purpose Financial Report—Emphasis of Matter Paragraph due to Material Uncertainties regarding Going Concern
This compilation takes into account amendments made up to and including 1 July 2013 and was prepared on 1 July 2013 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (October 2009) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 27 October 2009 | 1 January 2010 |
| ASA 2011‑1 [B] | 27 June 2011 | 1 July 2011 |
| ASA 2012-1 [C] | 31 July 2012 | 1 July 2012 |
| ASA 2013‑3 [D] | 1 July 2013 | 1 July 2013 |
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| A8 | Amended | ASA 2011‑1 [42] |
| A12 | Amended | ASA 2011‑1 [43] |
| [Aus] Appendix 2 | Amended | ASA 2011‑1 [44] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [45] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [46] |
| [Aus] Appendix 3 | Amended | ASA 2011‑1 [47] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [48] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [49] |
| [Aus] Appendix 1 | Diagram replaced | ASA 2012-1 [4] |
| A2 | Amended | ASA 2013‑3 [10] |
| A21 | Amended | ASA 2013‑3 [11] |
| Aus A21.1 | Amended | ASA 2013‑3 [12] |
| [Aus] Appendix 3 | Amended | ASA 2013‑3 [13] |
[A] Federal Register of Legislative Instruments – registration number F2009L04095,
27 October 2009
[B] Federal Register of Legislative Instruments – registration number F2011L01379,
27 June 2011.
[C] Federal Register of Legislative Instruments – registration number F2012L01671,
10 August 2012.
[D] Federal Register of Legislative Instruments – registration number F2013L01326,
1 July 2013.
Auditing Standard ASA 570 Going Concern (as amended to 1 July 2013) is set out in paragraphs Aus 0.1 to Aus A27.2 and [Aus] Appendices 1 to 3.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing Standards, which sets out the intentions of the AUASB on how the Australian Auditing Standards, operative for financial reporting periods commencing on or after 1 January 2010, are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
Dated: 1 July 2013
This compilation takes into account amendments made up to and including 1 July 2013 and was prepared on 1 July 2013 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (October 2009) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 27 October 2009 | 1 January 2010 |
| ASA 2011‑1 [B] | 27 June 2011 | 1 July 2011 |
| ASA 2012-1 [C] | 31 July 2012 | 1 July 2012 |
| ASA 2013‑3 [D] | 1 July 2013 | 1 July 2013 |
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| A8 | Amended | ASA 2011‑1 [42] |
| A12 | Amended | ASA 2011‑1 [43] |
| [Aus] Appendix 2 | Amended | ASA 2011‑1 [44] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [45] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [46] |
| [Aus] Appendix 3 | Amended | ASA 2011‑1 [47] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [48] |
| [Aus] Appendix 2 and [Aus] Appendix 3 | Amended | ASA 2011‑1 [49] |
| [Aus] Appendix 1 | Diagram replaced | ASA 2012-1 [4] |
| A2 | Amended | ASA 2013‑3 [10] |
| A21 | Amended | ASA 2013‑3 [11] |
| Aus A21.1 | Amended | ASA 2013‑3 [12] |
| [Aus] Appendix 3 | Amended | ASA 2013‑3 [13] |
[A] Federal Register of Legislative Instruments – registration number F2009L04095,
27 October 2009
[B] Federal Register of Legislative Instruments – registration number F2011L01379,
27 June 2011.
[C] Federal Register of Legislative Instruments – registration number F2012L01671,
10 August 2012.
[D] Federal Register of Legislative Instruments – registration number F2013L01326,
1 July 2013.
Auditing Standard ASA 570 Going Concern (as amended to 1 July 2013) is set out in paragraphs Aus 0.1 to Aus A27.2 and [Aus] Appendices 1 to 3.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing Standards, which sets out the intentions of the AUASB on how the Australian Auditing Standards, operative for financial reporting periods commencing on or after 1 January 2010, are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
Dated: 1 July 2013
Auditing Standard ASA 570 Going Concern (as amended to 1 July 2013) is set out in paragraphs Aus 0.1 to Aus A27.2 and [Aus] Appendices 1 to 3.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to Australian Auditing Standards, which sets out the intentions of the
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